Nonprofit job agency to pay U.S. $1.1 million

Improper expenditures found, spurring penalty

The San Diego Workforce Partnership is paying a $1.1 million settlement to the U.S. Department of Labor. The agency is trying to minimize the cost to taxpayers, but here is the worst case scenario for cost-sharing:

City of San Diego: up to $517,743

County of San Diego: up to $517,743

San Diego Workforce Partnership: At least $100,000

A job training agency created by the city and the county of San Diego has agreed to pay the federal government $1.1 million as part of a settlement after a two-year audit found millions of dollars of improper expenditures.

The city and county have agreed to shoulder part of the penalty levied by the U.S. Department of Labor against the San Diego Workforce Partnership.

The City Heights-based nonprofit serves as many as 30,000 residents a year by funding a network of one-stop career centers and youth programs. It's primarily supported by federal grants.

The City Council yesterday unanimously ratified the settlement and agreed to a four-year payment plan that could put the city on the hook for $517,743.

The first payment is $235,487, with the agency paying $100,000, and the city and the county splitting the rest.

In subsequent years, the county and city would split $300,000 in annual payments, if the partnership cannot find its own source of funding or persuade the federal government to reduce the liability.

City and county officials plan to seek reimbursement from Workforce Partnership, which is looking to recover some of its costs from its insurance carrier, and make changes to improve oversight.

The nonprofit is overseen by three boards, including a policy board with City Council members Tony Young and Ben Hueso and county Supervisors Ron Roberts and Greg Cox on it.

“It's safe to assume because of the way this has turned out, there will be a little stronger role for the county and the city for the oversight of this organization,” county Supervisor Ron Roberts said in an interview.

Mark Cafferty, chief executive officer of the Workforce Partnership, assured the City Council yesterday that “numerous measures” have been taken to prevent future mistakes, including beefing up its finance staff.

“I truly feel that we provide a tremendous service for San Diego,” he said. “Right now that service is needed more than ever. We have a lot of people out of work or they are in work and struggling.”

The one-stop career centers, operated by organizations under contract with the agency, are seeing more people coming in for help, he said. Federal auditors examined how the agency spent $90.3 million, going as far back as 1999. According to the audit released in February 2007, the partnership improperly charged $11.6 million in salaries and associated costs to grants based on estimates, not actual employee time spent on work.

Also, much of the 82,700-square-foot building leased by the agency at 3910 University Ave. sat vacant, costing money that was not appropriate for the grant, the audit said.

The partnership has since restructured its building lease. Cafferty said it is no longer paying rent on unused space.

The feds initially sought $7.7 million. The $1.1 million was a settlement.